The first episode did well, but not good enough to completely self-fund the second episode. It sold over 150,000 units, which is better than many shooters. It more than paid for itself, but not enough to entirely fund the next one.
This was caused by two reasons. The first episode was the most expensive because we needed to build the asset and code bases from the ground up. There were also tools and such that needed to be developed. Successive episodes would have benefited from that foundation, and therefore level this initial imbalance. We knew that when we started Episode 1, but the demand of the first episode was more than we anticipated. The first episode also ran longer than we expected (what game doesn't, even when you think you've planned for this) and it went over-budget.
We did continue with Episode 2, but we had to stop a few months ago due to a funding problem. Making games is fun, but it isn't easy, …especially for an independent developer!